Chapter 7 Questions

[Anonymous]

I have some questions regarding Chapter 7 bankruptcy as I prepare to meet with an attorney and file soon in Arkansas.  I am married but plan to file single if we can because we are over the median income limits.

1.  I have AT&T cellular service with my family and the account is in my name.  I'm not behind on my service and have autopay setup.  We have two phones under the AT&T Next plan.  How are these treated in a BK case?  How will AT&T proceed once filed?  I also have 2 phones on this same account but they are financed through Citizen One and Samsung.  My guess is these are secured debts and can be reaffirmed but I haven't been able to find much information concerning them.

2.  My wife and I have one joint account.  We used it earlier this year to do a repair on the house.  My wife is paying that and I know it will be included in my bankruptcy so I am wondering how it will affect her status?  Will they likely close the account and demand full payment?

3.  I have a private student loan that was co-signed by my grandmother.  I have read horror stories about what happens to these when a person files bankruptcy.  I am not behind on these payments either though and they are setup on autopay.  Will the lender work with me to continue this after filing?

4.  How or what exactly are preferential payments?  I have read some things about not buying/paying things over $600.  I had to pay a plumber $1200 in May for a leaking tub in our upstairs bathroom.  Would something like that get me in trouble?  Do they use cumulative stats, say for example if I buy $600 worth of groceries over 3 months, is that going to get a red flag?

I may have more questions later but am trying to prepare to the best of my knowledge beforehand.  Thanks for any info you guys can give me.

[CMoore515]

1. AT&T will likely not even be included in the BK. As far as the other two, ask your attorney.

2. Likely.

3. Student loans arent bankruptable, so you'd likely never notice anything different. Ask your attorney.

4. Preferential treatments are the ones totaling $600 to one creditor. Example: Paying a Chase credit card off prior to filing. Not cumulative at all. For example, groceries are a living expense, not a creditor. The repair will probably be deemed a necessary expense. 

[Shooting-For-800]

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@Anonymous wrote:

I have some questions regarding Chapter 7 bankruptcy as I prepare to meet with an attorney and file soon in Arkansas.  I am married but plan to file single if we can because we are over the median income limits.  

Total household income must be documented regardless of filing single or married.

1.  I have AT&T cellular service with my family and the account is in my name.  I'm not behind on my service and have autopay setup.  We have two phones under the AT&T Next plan.  How are these treated in a BK case?  How will AT&T proceed once filed?  I also have 2 phones on this same account but they are financed through Citizen One and Samsung.  My guess is these are secured debts and can be reaffirmed but I haven't been able to find much information concerning them.

Should be fine.  You owe more than they are worth.

2.  My wife and I have one joint account.  We used it earlier this year to do a repair on the house.  My wife is paying that and I know it will be included in my bankruptcy so I am wondering how it will affect her status?  Will they likely close the account and demand full payment?  What kind of account?  Loan?  Joint loan?  If so, she will still owe the balance it should not be accelerated.  Joint accounts mean both parties are responsible.  You will be stripped but she would not.  If you are not behind, you should be fine.

3.  I have a private student loan that was co-signed by my grandmother.  I have read horror stories about what happens to these when a person files bankruptcy.  I am not behind on these payments either though and they are setup on autopay.  Will the lender work with me to continue this after filing?  Yes.

4.  How or what exactly are preferential payments?  I have read some things about not buying/paying things over $600.  I had to pay a plumber $1200 in May for a leaking tub in our upstairs bathroom.  Would something like that get me in trouble?  Do they use cumulative stats, say for example if I buy $600 worth of groceries over 3 months, is that going to get a red flag?  You are fine.  This relates to people paying back friends and family before credit cards when they could have paid everyone more evenly.  Home repair is not unusual at all as long as the plumber was not your best friend or something.

I may have more questions later but am trying to prepare to the best of my knowledge beforehand.  Thanks for any info you guys can give me.

Median income matters but it is not a hard line.  

What is your income?

Your spouse?

Median for 1?

Median for 2?

Any kids?  If so, household median?

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[Anonymous]

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@Shooting-For-800 wrote:

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@Anonymous wrote:

I have some questions regarding Chapter 7 bankruptcy as I prepare to meet with an attorney and file soon in Arkansas.  I am married but plan to file single if we can because we are over the median income limits.  

Total household income must be documented regardless of filing single or married.

Yes, we are aware both of our incomes would be used in the means test to determine qualifications.

1.  I have AT&T cellular service with my family and the account is in my name.  I'm not behind on my service and have autopay setup.  We have two phones under the AT&T Next plan.  How are these treated in a BK case?  How will AT&T proceed once filed?  I also have 2 phones on this same account but they are financed through Citizen One and Samsung.  My guess is these are secured debts and can be reaffirmed but I haven't been able to find much information concerning them.

Should be fine.  You owe more than they are worth.

Which are you applying this to, the AT&T account, the 2 outside that account, or both?

2.  My wife and I have one joint account.  We used it earlier this year to do a repair on the house.  My wife is paying that and I know it will be included in my bankruptcy so I am wondering how it will affect her status?  Will they likely close the account and demand full payment?  What kind of account?  Loan?  Joint loan?  If so, she will still owe the balance it should not be accelerated.  Joint accounts mean both parties are responsible.  You will be stripped but she would not.  If you are not behind, you should be fine.

It is a joint credit card account at Home Depot (Citi-issued) that was used for repairs.  My assumption is they will close the account, charge it off, etc. and then come after her for payment.  This would mess up her credit report which is something I do not want to happen.  I am thinking she should pay it off but then you get into the whole issue of preferential payments.

3.  I have a private student loan that was co-signed by my grandmother.  I have read horror stories about what happens to these when a person files bankruptcy.  I am not behind on these payments either though and they are setup on autopay.  Will the lender work with me to continue this after filing?  Yes.

Really?  I have read horror stories where they auto-default the loan and make the entire balance payable now if a party declares bankruptcy.

4.  How or what exactly are preferential payments?  I have read some things about not buying/paying things over $600.  I had to pay a plumber $1200 in May for a leaking tub in our upstairs bathroom.  Would something like that get me in trouble?  Do they use cumulative stats, say for example if I buy $600 worth of groceries over 3 months, is that going to get a red flag?  You are fine.  This relates to people paying back friends and family before credit cards when they could have paid everyone more evenly.  Home repair is not unusual at all as long as the plumber was not your best friend or something.

The plumber was an actual company.  We do pay a friend to watch our children although it is not $600 at a time but it appears that cumulative amounts are not used in calculations of preferential payments.  Is that correct?  Would that be ok in terms of calculations on the means test for childcare?

I may have more questions later but am trying to prepare to the best of my knowledge beforehand.  Thanks for any info you guys can give me.

Median income matters but it is not a hard line.  

What is your income?

Your spouse?

Median for 1?

Median for 2?

Any kids?  If so, household median?

Our combined monthly income before taking anything out is between $8000-$9500 per month.  We have 2 children and the median for our state is $5695 for a famiy of 4 right now so we would have to do some work to make it below that number but I think we can do it, according to some of the attorneys I have spoken to so far although others have told me no.

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[Shooting-For-800]

I think you are wrong about the joint account.  It is a revolving card.  Sure they could close it, but I doubt they can or will demand balance repaid other than normal minimum payments.  If you are that worried, call them from a different phone and ask them without giving them any info.  There is no reason for them to damage your spouses credit.  It just becomes a non joint card at that point.  She is still responsible and if she is not discharging the debt, then life goes on as normal.

[hashtag]

I have some questions regarding Chapter 7 bankruptcy as I prepare to meet with an attorney and file soon in Arkansas.  I am married but plan to file single if we can because we are over the median income limits.

1.  I have AT&T cellular service with my family and the account is in my name.  I'm not behind on my service and have autopay setup.  We have two phones under the AT&T Next plan.  How are these treated in a BK case?  How will AT&T proceed once filed?  I also have 2 phones on this same account but they are financed through Citizen One and Samsung.  My guess is these are secured debts and can be reaffirmed but I haven't been able to find much information concerning them. I had switched to Tmobile two weeks before filing and was expecting Verizon to bill me for the remainder balance on the phones of $400 each for two phones. Tmobile gave me money to switch to them for a promotion which I planned on using to pay off Verizon. Two months later I did not see a charge for the phones. After chatting with online customer service they informed me the balance was already paid. I did not pay the balance nor the gift card from Tmobile because it still had money on it. I suspect because of BK and including them, they wiped the debt off. I still have account with them for another line and its just fine no issues. 

As for your other questions, I dont have experience with those scenarios.